*Actual hours are equal to standard hours for units produced.
-A company records its inventory purchases at standard cost but also records purchase price variances. The company purchased 5,000 widgets at $8.00 each, and the standard cost for the widgets is $7.60. Which of the following would be included in the journal entry?
A)debit Accounts Payable, $38,000
B)credit Direct Materials Price Variance, $2,000
C)debit Accounts Payable, $2,000
D)debit Direct Materials Price Variance, $2,000

Question

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*Actual hours are equal to standard hours for units produced.​
-A company records its inventory purchases at standard cost but also records purchase price variances. The company purchased 5,000 widgets at $8.00 each, and the standard cost for the widgets is $7.60. Which of the following would be included in the journal entry?
A)debit Accounts Payable, $38,000 
B)credit Direct Materials Price Variance, $2,000 
C)debit Accounts Payable, $2,000 
D)debit Direct Materials Price Variance, $2,000

Quizplus · Accepted Answer

The purchase price variance is calculated as the difference between the actual cost and the standard cost, multiplied by the quantity purchased. Here, the variance is ($8.00 - $7.60) x 5,000 = $2,000. This unfavorable variance is recorded as a debit to the Direct Materials Price Variance account.

​ *Actual Hours Are Equal to Standard Hours for Units Produced.​

*Actual Hours Are Equal to Standard Hours for Units Produced.